Oct 16, 2009
In 1990, as part of my final year in extended undergraduate studies, I had the good fortune of attending the University of Cambridge’s Gonville & Caius College for a Summer Term. I was fully immersed in two courses – 19th C British Novel & Shakespeare in Performance – completely taught by Cambridge professors and was in residence at Caius (pronounced Keys). It was a fabulous, life altering experience. With a nearly 700 year history, I have always been struck by the prescient nature of the College’s founders, if not Medieval architects – how there is a correlation to the venture business, if not many other iterative pathways in life.
As a first year undergraduate student at Caius, you physically and metaphorically enter the College through the Gate of Humility. Assuming all goes well, you then pass on through the Gate of Virtue, and, once the degree has been attained, exit through the Gate of Honour.
This earned, milestone-driven sequence is analogous to that of the venture investor, i.e. at point of first investment, through active service on a board, and, ultimately, by facilitating a successful exit and distributing capital to limited partners.
Unfortunately, over the last ten years, VCs have forgotten or suppressed this basic but critically important sequence. A majority of VCs have forgotten about the humble, active service to the entrepreneur and the portfolio company. We have been less than virtuous by raising too much money per investment vehicle, ending up on too many boards and creating dilution of service across the same. And, we certainly have not honored our limited partners who have tied up precious capital in funds over multiple years, only to find that distributions have been delayed yet again, and with meek return on invested capital.
It is time for smaller funds, smaller teams, back-to-basics venture investing with a sense of humility, virtue – and, ultimately, honor.